Heartbreak and the separation of families aren’t pleasant subjects.
But the reality is that there were over 630,000 divorces in 2021 alone. So, avoiding the subject entirely isn’t realistic.
Beyond the personal turmoil associated with separating from a spouse, there’s a lot that needs to happen from a legal perspective.
Although some states don’t legally require that those involved source a lawyer, they’re highly recommended.
Some experts even suggest that not having a divorce lawyer leads to disadvantages when discussing rights to property, child custody, or spousal support.
There’s only one problem, though. Divorce lawyers are expensive. The average cost of seeking and utilizing one is over $11,000.
Meanwhile, the median bank account balance for Americans is $5,300.
You can see where I’m going with this.
If the average cost of seeking a divorce lawyer is significantly higher than what most Americans have in their bank account, how are they supposed to afford it?
Some readers might answer that question by saying that I already answered it a few sentences before and say that the best option is to do it yourself.
Unfortunately, “How-to defend yourself during a divorce trial” doesn’t fall under the same umbrella as fixing your screen door. Defendants can’t just watch a “how-to” video right before their court date in preparation.
But if lawyers don’t find a way to make their services more affordable…this might end up being what divorce settlements look like in the future.
Believe it or not, there’s still an easy solution to solving this conundrum…payment plans. Here are 11 reasons why every divorce lawyer should offer them.
Table of Contents
Reason 1: Your Clients Want Them
The fact of the matter is that your clients want to pay you electronically.
72% of people say that they would prefer paying legal fees on a payment plan. That’s what I would consider an overwhelming majority.
Not every organization is going to give their clients what they want. If you tried to implement every little piece of feedback you’ve received, you would lose sight of your organization’s original purpose.
Studies show that people are skeptical about organizations that say they prioritize their customer’s interests over their own.
But this isn’t one of those scenarios.
I’ll reiterate that the majority of your clients want to pay their legal fees to you via a payment plan. If you don’t start accepting this form of payment, they’re going to find an attorney or legal practice that does.
Reason 2: You'll Collect Balances Faster
Statista list's family law firms as having the seventh-worst average collection rate out of 30 different categories. The average rate? 86%.
By that statistic, divorce lawyers can expect to write off 14% of their revenue every year. Talk about spending a lot of money on debt collection letters for little to no reward.
I know what you’re thinking, “There’s no way that offering payment plans to my clients will increase my collections by that much.”
If that quote just described your inner thoughts (or even if it didn’t), this next statistic will convince you.
Almost 85% of electronic payments to lawyers get paid within one week. That stat isn’t even factoring in payment plans.
Just by offering electronic payments alone, you’re increasing your collections. By adding payment plans into the mix, you’re making your services more affordable.
Reason 3: You'll Receive More Clients
The rate of divorce isn’t ever going to reach zero. From a societal perspective, that might sound pessimistic…but it’s also why divorce firms exist.
Even so, 74% of low to middle-income individuals experienced at least one civil legal problem last year. Of that population, almost half of them cited that they didn’t seek legal help because of cost.
Divorce is one of the most common types of civil cases in the United States. Thus, it’s safe to assume that many of those low to middle-income individuals who avoided legal help because of cost are trying to separate from their spouses.
Meanwhile, 76% of consumers are more likely to buy something if the retailer they’re shopping at offers a simple payment plan.
In other words, offering payment plans as a divorce lawyer will increase your number of clients.
Reason 4: Payment Plans are a Competitive Advantage
How many divorce law firms are there within a 20-mile radius of your headquarters?
I did a quick search on Google Maps and the image above is what I found. That’s a lot of red dots. If you’re a divorce lawyer near the Cleveland, Ohio area, you have a lot of competition.
What separates your firm from your competitors?
Your response to that question is likely that you take care of your clients better. I believe you, but that’s also probably what your competitors say that their competitive advantage is too.
Payment plans could be another differentiator for your firm.
You see, 40% of consumers say that they would never hire a lawyer who doesn’t take debit or credit.
If that’s the case, what are the odds that competitor firms offer payment plans? Low.
62% of law firms say that they budget for technology. What does technology have to do with payment plans?
To accept online payment at all, you need to source a compliant solution…or technology.
Reason 5: Growing Firms Use Online Payment
This is a good follow-up reason to the one above.
A 2021 study found a correlation between growing firms and online payments. In other words, modern law firms that succeed are likely to offer online payment and plans as an option to their clients.
via Clio
Reason 6: Cost of Collections Decreases
The average cost of a paper check transaction is $5. That’s a minor cost, right?
Well, let’s say that your client doesn’t pay you right away. 30 days later, you send them a past due letter to remind them of their outstanding balance. There’s a small cost associated with that between creating the letter, printing it and mailing it. It’s starting to add up.
Let’s say that after that first past due letter, you have to send them two more over the next 60 days and still haven’t received payment.
At this point, the account is 90 days overdue and the cost associated with trying to collect it outweighs the balance. Time to source a collections agency.
Yet, the average collection fee is 20% - 35%. Once this account is finally closed, your firm isn’t getting adequately paid.
But switching to and accepting e-payments and offering payment plans can reduce processing costs by up to 80%.
You won’t have to worry about calculating all of the small costs associated with each of the clients’ balances, their payment plans will automate everything.
Reason 7: Automated Reminders
Almost 40% of people report missing a bill because they forgot about it.
If your client forgets about the balance that they owe you and you’re using manual billing processes, what does the reminding process look like?
Well, you’re going to print out another copy of their invoice and mail it.
What’s the problem with that?
It’s going to be another 3-5 business days before your clients receive their reminder invoice.
On an individual level, it isn’t that hard to manage. But, if you scale that manual process up across all of your clients, you’re going to need to have an entire team devoted to your accounts receivable process.
Payment plan solutions contain features within them that automatically send reminders to opted-in users. That cuts down on the entire process associated with collecting from your clients so that you can focus on providing service to your clients.
Reason 8: It's Ethical
Although all of the reasons I’ve provided so far sound great, there’s still a lingering argument that remains.
Many divorce lawyers are quick to say that accepting electronic payments from clients isn’t ethical.
That’s a strong argument. Lawyers, regardless of their specalty, don’t want to face accusations or penalties due to commingling.
Organizations that provide payment plans for lawyers understand the ethical requirements that lawyers need to keep in mind as it pertains to keeping client and third-party funds separate from their operating funds.
How do they help lawyers navigate this ethical obligation?
The solutions separate payments into earned and unearned funds. The law firm can then direct each category into its proper accounts.
Even with that, though, the ethical dilemma still isn’t completely solved.
Many online payment platforms inherently come with a processing fee. In most cases, the processing fee gets passed down to the client. But, that ethically can’t happen in the legal industry. To further prevent commingling, the solution deducts any processing fees associated with online payments or plans from the firm’s operating funds.
Reason 9: Leads to New Services
Do you remember during the introduction of this blog post when I mentioned DIY divorce cases?
In an ideal world, individuals seeking legal separation from their spouse would always source the services from a divorce lawyer. But that’s not realistic.
Only 5% of divorces go to court.
Based on that percentage and the statistic from earlier regarding the average amount of money Americans have in their savings accounts…people want to try to settle divorces themselves.
If the individuals who plan on separating don’t want to source help from attorneys, they’re not going to reach out to your firm.
What are those individuals going to do?
They’re going to Google “online divorce services”.
Those services range anywhere from $130 - $500 depending on the number of “features” included.
If you accept online payment and plans…this is a potential new line of business for your firm.
Setup a web page with information about the offering and host a form from your payment solution provider for visitors to purchase your services.
Reason 10: Gives Clients Freedom
Not every organization pays its employees at the same interval.
Some organizations choose to pay their employees bi-weekly, others go bi-monthly. Some employees are contractors and only get paid for work-related efforts.
Why am I stating the obvious?
Well, historically, divorce fees aren’t structured around when clients get paid.
That makes a lot of sense, though, right? Charging your clients based on when they receive money likely increases their chances of paying you.
Offering payment plans gives your clients the freedom to choose when they pay you. Thus, they’re naturally going to choose dates that relate to when they get paid by their employer.
Reason 11: Impact Clients Beyond Finances
Divorce isn’t an easy process for your clients to go through. It’s associated with increased anxiety, depression and alcohol abuse.
When you’re offering payment plans to your clients, you’re helping them get through a troubling time in their life more affordable.
Ironically, finances are the second leading cause of divorce.
Conclusion
After all of this information, the bottom line is that modern divorce lawyers need to adjust their business model to what their clients want.
What do they want? Payment plans.
While it may be a little unconventional, offering payment plans is a great way to attract new clients and increase your bottom line.
By allowing your clients to pay over time instead of all at once, you’re making your services more affordable…which is something your competition hasn’t figured out how to do yet.
